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Renters Insurance: What Does it Cover & Do You Need it?

By: Susan Finch
August 21, 2020

Poring over a renters insurance policy can feel a little overwhelming. However, it’s a straightforward way to protect yourself against natural disasters, mishaps, and accidents.

It's also a reasonable expense that can pay off big if you suffer a property loss or other issues.

But do you really need renters insurance and that monthly cost? Here's a look at the ins and outs of a renters insurance policy.

What is Renters Insurance?

Renters insurance, or tenant's insurance, protects renters living in an apartment, condo, or home. Renters insurance typically covers unexpected personal property damage costs and legal liability.

Landlord's insurance works differently from renters insurance. That covers your unit's physical building and the rest of the complex. However, your landlord's insurance does not include coverage of your personal belongings.

What Does Renters Insurance Cover?

Having renters insurance is imperative if you suffer personal property damage from specific, pre-approved emergencies and mishaps, such as:

  • Fire
  • Wind and hail
  • Smoke damage
  • Lightning
  • Vandalism
  • Theft
  • Falling objects
  • Water damage
  • Hail
  • Explosions
  • Volcanoes
  • Snow and ice collapse
  • Wind damage
  • Mold (in some circumstances)

You should always double-check that your rental policy covers everything you need. Some policies may not cover everything on this list, or have exceptions depending on your area.

There's also a standing list of accidents and issues that insurance companies typically don’t cover, regardless of your situation. Those include:

1. Bed bugs, rats, roaches, and other apartment pests

Pests and infestations are never pleasant to deal with. They can ruin your belongings quickly.

Mice like to chew wires, bugs often ruin mattresses, and roaches will make your food inedible. Your lease should outline the terms of pests. They usually fall under the landlord's responsibility.

Regardless of who’s responsible for hiring pest control, renters are usually the ones paying to replace their damaged personal belongings.

2. Floods

Renters insurance doesn't cover apartment flooding. However, your landlord's property insurance probably does.

You'll need to speak to your renters insurance representative, landlord, and check your local ordinances to figure out your next steps if your apartment becomes uninhabitable due to a flood.

The good news is, landlords usually can’t charge rent during flooding repairs. They may need to reimburse you for moving expenses.

3. Vandalism or theft of your car

Renters insurance doesn't cover vandalism or theft of your car. But drivers are required to have auto insurance and can help in an emergency.

If you suffer vandalism or discover your car is stolen, you'll still have recourse through your auto insurance company.

4. Earthquakes

Earthquakes are a non-issue for much of the country. However, that leaves areas like California out of luck.

You may be able to take out an additional policy specifically designed to cover earthquake damage. But it’ll come at a premium.

5. Sinkholes

Sinkholes create fissures and can weaken the ground or foundation of your property. You might be able to find regional sinkhole coverage.

However, renters insurance doesn't cover this issue as a rule of thumb. If you live in an area known for its sinkholes, ask your landlord if their property insurance covers potential sinkhole damage to your apartment.

It's unlikely your personal belongings will be protected under your landlord’s policy. However, it's worth asking.

6. Pet Damage

If you have pets, renters insurance won’t cover damage from your furry friends. You should also take out a pet insurance policy to cover Fido's urine stains on the carpet, scratches, and reimbursements to portions of your veterinary bills.

Roommates with pets should take out their own renters and pet insurance to ensure damage to the apartment and your belongings are covered.

What's the Difference Between Personal Liability and Personal Property Coverage?

Personal liability coverage is part of your renters insurance policy. It protects you if someone tries to sue you or bring a claim against you for injury.

It can also cover the loss of someone else's personal property while in your apartment, or their medical bills related to an injury in your apartment.

Personal property coverage covers the cost of repairing or replacing belongings. That includes furniture or electronics within your coverage limit.

I Don't Have Much Stuff, What Else Does Renters Insurance Cover?

Renters insurance is more than about covering the loss of your stuff. It can also get you out of major trouble and headaches. Here are some other items it may cover:

1. Financial Fraud

Many renters don't realize that their policy can also cover credit card theft and bank forgery. If someone breaks in and makes off with your financial information, your insurance company may reimburse you for the loss.

2. Spoiled Food

What if you have a power outage and your food spoils? Renters insurance may cover food replacement, as well.

Some policies will only cover a portion of damage. So, ask an insurance agent in advance if your area is prone to outages.

There are always exceptions to the rule. A faulty refrigerator that spoils your food may fall under your landlord's responsibility. Check your lease terms to see who is responsible for appliances and what kind of loss it covers.

3. Storage Units

You can file a claim on damage and property loss in your storage unit. However, most policies will only cover some damage. Ask your insurance agent about what it covers before you purchase a policy.

4. Your Friends' Stuff

Your friends' stuff is also covered if they stop by your apartment and disaster strikes. Renters insurance would likely cover a friend's smartphone if your leaky pipe or crumbling ceiling destroys it. That's good news for your wallet and your friendship.

Will Renters Insurance Cover Moving Expenses?

You may think you don't need renters insurance, especially if you’re a college student without much stuff. But remember, you still need a place to live if disaster strikes.

Depending on the issue that's displaced you from your apartment, renters insurance could mean the difference of having a paid hotel room and being temporarily homeless or sleeping on couches indefinitely.

If you don't opt for renters insurance, it's up to you to stay proactive about your well-being and make sure you have a plan if disaster strikes.

Am I Covered Under My Roommate's Policy?

Sorry, but no. Your roommate's renters insurance only covers their belongings and loss, not yours. So if a tree goes through your apartment and destroys the living room, your roommate is likely to recoup their expenses while you're left with a hefty bill to replace your own belongings.

It’s possible to get a group policy with your roommates. However, your entire rate is likely to go up and get expensive quickly if someone makes multiple claims. It's better to have your own policy to protect yourself.

Is Renters Insurance Required?

Renters insurance isn't legally mandated or required by all landlords. However, you will find that many require it before they'll agree to lease terms.

They may even request a minimum coverage amount. A minimum of $100,000 in coverage is standard for renters insurance. That can go a long way to replace your belongings.

Even if your landlord doesn't require renters insurance, it's still a good idea to look into a policy to protect yourself from unexpected mishaps, disasters, and accidents that can drain your wallet.

How Much Does Renters Insurance Cost?

Despite how much renters insurance covers in a case of loss or damage, policies are usually pretty cheap. Most renters can find a policy for less than $20 a month.

You're also at an advantage over homeowners who typically pay four to five times as much for similar coverage.

Do I Have Enough Stuff to Make Renters Insurance Worth It?

If you're a beginner to renters insurance, take a walk through your apartment. Jot down notes on how many things are in your residence.

You might not think you've acquired much, especially in a smaller space. However, you’ll probably be surprised.

Dishes, jewelry, shoes, clothes, pet supplies, and everything else are likely to add up to several hundred things in your apartment. Taking inventory of what you have can also help you narrow down a renters insurance policy that works for your situation.

One of the significant benefits of renters insurance is the financial peace of mind. Replacing your dishes probably isn't a big deal. However, replacing everything in your apartment at the same time is going to be a tough financial burden.

Is Renters Insurance Tax-Deductible?

No, unfortunately, renters insurance isn't tax-deductible. There’s an exception if you're running a business in your apartment, condo, or rental home, and you have a dedicated workspace.

That means you probably can't deduct your premiums if you use a roaming laptop around your apartment or work at the table you also eat dinner at.

However, if you’re running a business, you should make sure that aligns with your lease terms and that your landlord is okay with it. Your local ordinances may require you to take out some additional business insurance. That could also cover some of your property's loss.

It's best to consult with a CPA before deciding to deduct renters insurance, or giving up on the deduction entirely.

Do I Need Renters Insurance?

Renters insurance is a straightforward decision. Look at how little a policy costs in comparison to how much it covers.

Renters insurance also buys you peace of mind that your belongings will be covered and help ease the financial burden during a natural disaster or accident.

It's also tempting to wait until you've rented your first apartment to figure out if you need renters insurance. But disasters can strike at any time, and the loss of all your new belongings will likely be financially devastating during that first year.

Some renters may feel their belongings aren't worth much, and taking out a policy is more trouble than it's worth. In reality, your things are worth more than you think. It’ll cost a bundle to replace everything.

Restocking every room from your bedroom linens to kitchen gadgets adds up quickly. Not sure how much your belongings are truly worth? Check out Lemonade's guide.

Remember that renters insurance isn't all about replacing all of your stuff. If your apartment becomes uninhabitable, your policy will probably put you up in a hotel and pay for various moving expenses.

Remember that renters insurance isn't all about replacing all of your stuff. If your apartment becomes uninhabitable, your policy will probably put you up in a hotel and pay for various moving expenses.

What Should I Do Next?

Research renters insurance policies and make sure to pick a robust enough policy that makes it all worth it. This isn't the time to skimp if your apartment catches on fire or you're displaced due to hurricane damage.

It's also a good idea to take photos and videos of your things and document everything you have. This can feel a little tedious. However, it’ll help speed up your renters insurance paperwork. It’ll also give you more recourse if you ever need to file a claim.

Ready to find a new renters insurance policy and look for a new apartment? Apartment List can help you find an apartment to fit your budget and lifestyle with our apartment finder.

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